Prelims 2022 · Economy · Question 7
Which of the following activities constitute real sector in the economy?
- Farmers harvesting their crops
- Textile mills converting raw cotton into fabrics
- A commercial bank lending money to a trading company
- A corporate body issuing Rupee Denominated Bonds overseas.
Select the correct answer using the code given below:
Answer
1 and 2 only
1. Farmers harvesting their crops — This is production of goods in agriculture, which is part of the real sector. Verdict: Correct.
2. Textile mills converting raw cotton into fabrics — This is manufacturing/production of goods, clearly within the real sector. Verdict: Correct.
3. A commercial bank lending money to a trading company — Bank lending is a financial sector activity, not real sector production. Verdict: Incorrect.
4. A corporate body issuing Rupee Denominated Bonds overseas — Issuing bonds is raising finance in the financial sector/capital market, not real sector activity. Verdict: Incorrect.
Hence, only 1 and 2 constitute the real sector.